Small Financial Victories are Fun, Big Financial Victories Mean More

Size matters. Sure it does, when it comes to the personal finance issues we should be focusing on.

Sometimes we can get caught up in the emotion and excitement surrounding those small victories in life, that we can lose sight of the bigger picture things that are more important. I really think that this happens a lot when it comes to our money, and how we spend our time trying to save or make it.

Someone I know, a great person and otherwise very smart, is a good example of this. Here are two things this individual does that I think we can learn from in terms of opportunities to reprioritize our focus:

Focusing on Side Income to the Detriment of Primary Income

The whole concept of side income is one that I actually endorse. Multiple streams of income are a good thing, and often our hobbies and skills can help us make extra money. In the best of cases, this could even mean a sustainable income stream that could evolve into a new lifestyle altogether!

That being said, I wonder if the idea of side income can sometimes be so tempting that many folks take their eyes off the ball? Side income has been all the rage in some personal finance blogging circles, and to be sure, some have succeeded wildly. At the same time, many others are simply chasing a dream.

A more concrete example is someone I know who is always selling things via eBay or craigslist, and talking about it quite a bit. Now, as I mentioned above, I think extra income is great! However in this case, he’s really into it and gets quite excited over selling something he didn’t need for $20.

I’m not at all knocking that part of it, but it’s the time and energy spent on it that I would like him to consider. Let’s say it takes 3 hours to take pictures of an item, place the advertisement, respond to inquiries, and then actually complete the transaction via shipping or meeting the buyer. What is the effective hourly wage in this case? Less than minimum wage.

Perhaps if a lot of that time was reallocated to one’s career, financial goals could be achieved quicker? Then we can focus on side income for what it is: extra money that’s nice to have and fun to earn. Seems like a win-win!

Spending Excess Time on Saving While Forgetting the Value of Time

This concept is similar to the one discussed above, in terms of where to invest our time. The idea is that our time has value, and we should always respect ourselves by remembering this! It’s something that I’ve had to learn over time.

Here’s where I’m going with this: sometimes the time spent trying to save money makes the whole endeavor not worth it.

Let’s say that you spend 15 minutes searching for coupons online, or clipping coupons, so you can save $1.50 on some purchase. Time adds up. So, in this case, it’s like an effective hourly rate of $6.00, which is not quite minimum wage.

Similarly, driving somewhere further to save money is also an example of this. Driving an extra 10 minutes to go to a cheaper grocery store might save some money, but how much? Let’s say you’ll save $3 on your total bill. Well, for 20 minutes of driving, this means that the effective rate is $9.00.

However, then we can factor in the cost of gas. If that 20-minute round trip costs us ½ gallon of gas, that might be another $1.75 gone. Then, your effective hourly rate goes down to $7.25.

Bottom Line: Sometimes it helps to remind ourselves that while the little victories are fun (and low-hanging fruit should certainly be taken advantage of), it’s the bigger victories that matter more for our lives!

My Questions for You

What do you think about the idea of focusing on the big wins, and not sweating the smaller things as much?

Do you ever do any such calculations on the value of your time, in terms of whether or not some course of action is worth it to you?

Comments

Totally agree. Blogging might fall into that category as well. There is a lot of time spent on writing post, maintaining the web site etc, but what is the return? Most are not making any real money. My goal is to try and help others as well as make some side income.

I do my best to look at the time involved in doing an activity. I am all about diversifying my income and earning money on the side. But I’ve realized that making a few bucks on eBay every month isn’t going to get me to where I want to go. Another way to explain it is that I have limited potential with eBay. I can only sell a used video game for $10 bucks. But if I spend the time involved with the selling of the game on my blog, I could increase my earnings from my blog exponentially. You should almost always take time into consideration.

I know people that only want to focus on the big victories. They focus and put all their energy into it, and they may never achieve success, so they end up with nothing. Conversely you have those who spend all the time focusing their energy on a 30 cent coupon.

I believe that the best recipe for overall success is a mix. You need the small victories to keep you moving, to provide motivation, and give you knowledge so that you can then move onto the bigger items. If you go right for the big wins only, I think you’re skipping a step that might end up being fairly important.

You make a good observation here, thanks for pointing that out. I have to agree with you that there is some extra value to those smaller victories that doesn’t how up in the specific dollar amount at that point in time. There can be some intangible value in terms of motivation and habits, and keeping confidence up. Great comment.

Balance is the important part here. I’m definitely an advocate of earning side income and having multiple streams of so called “passive” income (only one of my streams is truly passive). However, it is easy to get caught up in a new venture and focus too much energy on a project that is only a “side” project. I try to keep things in perspective and remember where most of my income is coming from, then find time for my side projects on my own time.

So true, balance is key. It can be easy for many to get excited and obsessed, or look for shortcuts out of boredom. Balance keeps us excited and focused on the most important things while giving us some fun distractions too.

Wealth-Building Financial Lessons

Disclaimer

We are well meaning folks that are not investment professionals or financial advisors. Please feel free to have fun here, and take this information in the spirit of entertainment, as it is not financial or legal advice, For that, seek an appropriate professional. Your actual financial decisions are your own responsibility. Thank you.